You’ve probably heard a lot lately about debt relief programs and how to use them to get out of debt, said a reputable debt relief company in Louisiana. One of the most important things you need to understand is debt settlement and debt consolidation affect your credit negatively. Does Debt Settlement Affect Your Credit? Yes, debt settlement will negatively impact your credit in the short-term and it may be improved once you’ve finished the program and you’re debt free. The long-term effects aren’t as serious as bankruptcy.
Some people use a debt settlement and debt consolidation incorrectly. They think they can get away with paying less than they actually owe by filing for bankruptcy. While this option may work for some people it has other negative implications. For one thing, bankruptcy doesn’t actually resolve any debt issues – it just puts a big black mark on your credit report that stays there for 10 years.
When you use a debt relief program to negotiate with your creditors you’ll be working directly with them. That means that you won’t have to pay them a dime. You will be getting the money from either a savings account or a credit card. What you negotiate with your creditors can come in the form of a reduction in your principal amount or an extension of the term of your loan. In either case you’ll have the option of paying the reduced amount in lump sum or each month.
It’s important to remember that when you’re dealing with your creditors directly, you don’t have to be intimidated by them. Even if you know that you’re not getting a good deal, there’s a chance that you can get something. Usually you will be making an arrangement and your creditors will just read what you’re saying. If you throw in a few nice words about how tough things are for you at this time, your message will be taken very seriously. This is one reason why you want to have a debt relief company to handle the negotiations for you because they can make sure that you get what you need and nothing less.
In some cases the debt settlement process may result in you paying a lower monthly payment as long as you pay the agreed upon amount in a short period of time. However, many times you will actually end up paying more in the long run due to having a negative impact on your credit report. For example, if you choose to file for bankruptcy, you’ll likely have a negative impact on your credit score for ten years. Another scenario that may result in you paying more for your debt is if you agree to the creditor’s proposal but then you end up defaulting on the settlement agreement. The creditor has no other choice but to go ahead with the sale of the note if you default, although they will be able to recover part of their loss. Your creditors stand to lose the entire amount that you were paying, which will give you some breathing space.
If you feel like you don’t deserve to be treated this way or believe that you’re being treated unfairly, it may be in your best interest to seek legal counsel. An attorney will be able to provide you with advice on how to deal with your creditor and help you work out a settlement that satisfies both parties. If you owe more than seven hundred dollars and you feel like you don’t deserve to be treated this way, you should find out whether or not you can qualify for free debt counseling and see what options are available to you. Counseling might be an appropriate debt relief program for you and provide you with the peace of mind that you need to move forward and not fall behind.